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Paving the Way for a Spinoff

Cardinal Health’s Sally Curley worked on the transaction that established CareFusion as a separate company.

In the corporate world, it is rare to find executives who say they’re happy to stay in their current job. Assistant treasurers long to be treasurers, treasurers hope to be CFOs, and CFOs have their eye on a CEO’s corner office. That’s not the case for Sally Curley, though. The senior vice president for global investor relations at Cardinal Health, a $103 billion drug distribution company, says she sees herself as a “pro in place.”

“A lot of investor relations people see this job as a stepping stone, and it is true that many investor relations directors move through finance and—if they get treasury or controller experience—can move up to CFO,” Curley says. “You definitely need investor relations experience to be a CFO!”

“I am not saying I wouldn’t be interested in managing a unit,” she adds. “But I like being where I am.” Hers has certainly been an exciting, challenging tenure, “and a high-stress one,” she says.

Curley worked in investor relations at Genzyme Corp. for nine years before joining Dublin, Ohio-based Cardinal Health four years ago. At Cardinal, she found herself tasked with overseeing the investor relations aspects of a major spinoff: CareFusion, the $4 billion medical equipment manufacturing unit of Cardinal, at the time an $87 billion company.

“We had determined in 2008 that the manufacturing unit made more sense as a standalone operation, for both financial and cultural reasons,” she explains. But that meant Curley not only had to explain the deal to Cardinal Health’s analysts and investors, but also needed to sell it to potential investors and find analysts who would follow the new company.

“Our analysts were basically covering the drug distribution industry, and they didn’t really know how to value CareFusion,” Curley says. “So my team and I had to track down sell-side analysts who knew the medical equipment industry and who would be interested in following a $4 billion company.”

Having spent 26 years in the healthcare industry really helped there, she says. “I had a good Rolodex.”

The company announced the transaction in 2008. “It was an extremely hard time to be doing a spinoff,” she says, and ultimately, the deal took 14 months to complete. When it was concluded in September 2009, instead of spinning off 100% of CareFusion as originally planned, Cardinal Health ended up holding 20% of the shares, which it sold off over time.

In the end, analysts and investors liked the deal, and the shares of both companies rose 30% in the wake of the spinoff.

Just to keep things interesting, in January 2009, CFO Jeff Henderson suggested that Curley and Cardinal Health’s treasurer and controller work on a “shareholder model,” a process that resulted in Cardinal’s boosting its dividend significantly and selling investors on the idea of looking at the company in terms of both earnings andyield.

“We interviewed 100 shareholders and found that there was much more interest in dividends than a share buyback,” she says, “so we decided to increase our dividend 25% after the spinoff.”

As a result, Cardinal, long viewed as a core-value investment by investors, has become more of a core-value, growth and income asset, she says.

Curley says her biggest challenge is managing the volume of information her job requires. “My approach is color coding,” she laughs. “I get 200 to 300 e-mails a day. If it’s not essential, it gets color-coded for the weekend and I take care of it on Sundays."

Her other solution: “After 9 p.m., I don’t check e-mail. I only answer the phone. My executives have that number.”

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